Church Accounting

Accounting for Churches

Help for church treasurers

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CHURCH ACCOUNTING AND BIBLICAL STEWARDSHIP

Church accounting is an area that many small churches struggle with. Often the church treasurer is someone who has some business accounting experience, but may not have any specific training in church accounting. The membership expects the treasurer or church financial secretary to "handle" the church finances appropriately, even though they may have made very little provision for educating or training on the issues specific to church accounting.

The issues related to church accounting can be divided into three objectives:

1.Compliance with governmental regulations. The church's testimony can be damaged if it does not comply with the law. It is important for churches to demonstrate good stewardship and set an example for their members by being disciplined enough to inform themselves of the relevent tax laws and to comply with them. Many Christians today are in financial bondage and it is the church's responsibility to disciple them in Biblical stewardship. The first thing the church can do in this effort is to model financial responsibility.

2.Minimize the ministers tax liability. Minister's taxes are unique. In some areas they are less than non-ministers. In other areas, they are more than non-ministers. So, it is very important for the pastor, youth minister, music minister and everyone else involved in church accounting to understand how to properly structure minister compensation package to minimize taxes. It is not immoral or unethical to fully take advantage of legal methods to minimize taxes. In fact, most ministers are under-paid, so it is especially important they pay the least amount of taxes possible so that they can adequately provide for their immediate family as well as be a blessing to other people.

3. Sound financial decisions. The church frequently makes financial decisions based upon the financial reports presented by the Treasurer. If those reports are not accurate, it is very possible that the Church will unknowingly make unwise decisions based upon faulty information. Because churches typically use fund accounting, which can be complicated, the Treasurer or financial secretary needs to understand the underlying concepts of fund accounting and accurate financial statement preparation.

Based upon the church consulting I have done in my local practice, it appears that most small churches struggle with all three objectives. One of my goals for the Church Accounting Book is to assist/disciple churches in these areas. The book is an ever evolving process, so if you have a question that was not answered by the book, please let me know so that I can include it in the next release.

 

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